VANCOUVER — A lot has changed over the past 18 months for junior explorer Mega Precious Metals (MGP-V) and its Monument Bay gold-tungsten project located 570 km northeast of Winnipeg, Man. Though gold markets have taken a beating, Mega has preserved capital while advancing an intriguing shallow gold deposit with relatively high gold grades.
Mega released its last resource update at Monument Bay back in February 2012. At the time the project held 13 million measured and indicated tonnes grading 2.5 grams gold per tonne for 1.1 million contained oz., as well as 14 million inferred tonnes grading 3.78 grams gold for 1.73 million contained oz. Back then more than half of Mega’s ounces were in the underground inferred category, which held around 11 million tonnes grading 4.24 grams gold for 1.5 million contained oz. gold.
The company has since drilled another 32,500 metres at Monument Bay, and though the global resource size has not expanded greatly, the make-up of the deposit and its economic viability look to have improved, along with Mega’s better understanding of the geology.
On June 17 Mega released its updated resource at Monument Bay: 67 million measured and indicated tonnes grading 1.3 grams gold for 2.9 million contained oz. gold. What has changed materially is the project’s open-pit resource, which leapt 118% to 63 million measured and indicated tonnes grading 1.4 grams gold for 2.8 million contained oz., at a 0.7 gram gold cut-off. Inferred in-pit resources tack on 7.6 million tonnes grading 1.2 grams gold for 289,000 contained oz. gold.
“While the [measured and indicated] resource has grown significantly, the average open-pit grade provides high-quality ounces with significant potential for resource expansion in a politically safe and mining-friendly Canadian jurisdiction, giving Monument Bay the potential to become Canada’s next great gold mine,” says Mega Precious Metals president and CEO Glen Kuntz.
Mega’s current pit design focuses on its Twin Lakes deposit, and assumes a US$1,372 per oz. gold price and 5.2-to-1 stripping ratio. Mining costs are pegged at US$1.80 per tonne, while mill recoveries clock in at 95%. Monument Bay also hosts what Mega describes as a “distinct, higher-grade starter pit” that holds 667,300 oz. at a grade of 2.7 grams gold, assuming a 1.5-gram gold cut-off.
In addition to Twin Lakes — which has been drilled down to 615 metres and remains open along strike and down-plunge — Mega is working to outline potential open-pit opportunities at its nearby Mid East and AZ zones. Mid East lies along the same gold-bearing structure as Twin Lakes 2 km east, while AZ sits on a parallel structure 300 metres south. Mid East and AZ host a lower-grade, near-surface inferred resource totalling 18 million tonnes grading 0.5 gram gold for 312,000 contained oz., though both deposits also remain open along strike and at depth.
Mega says another difference in its new resource estimate is the “persistent, higher-grade nature of the deposit at different cut-offs.” The company made an effort to re-assay Monument Bay’s historic core, and has combined it with infill drilling to improve its geological model.
For example, assuming the cut-off grade on Monument Bay’s resource is raised to 1 gram gold, the project holds 35 million measured and indicated tonnes grading 1.8 grams gold for 2.1 million contained oz. Increasing the cut-off to 1.5 grams gold yields around 17 million measured and indicated tonnes at 2.5 grams gold for 1.4 million contained oz.
Mega’s wild card could be the recent discovery of tungsten mineralization in the form of scheelite throughout its gold-bearing structures. Kuntz told The Northern Miner in early May that the company had yet to achieve a sample density to incorporate the tungsten into a resource estimate, but expects to release a full gold-tungsten resource towards year-end.
“We have identified and confirmed the repeatable high-grade domains and the discovery of [tungsten mineralization], which may lead to a significant by-product credit,” Kuntz said after Mega’s updated resource. “Including [tungsten] in an updated resource is expected to increase the gold-equivalent grade of the deposit, making Monument Bay one of the highest-grade open-pit deposits in Canada. Collectively, these give [us] the ability to deliver solid exploration results and grow a resource base.”
Mega maintains a good cash position — with US$4.7 million in working capital at the end of March — and has planned a 7,000-metre step-out drill campaign at Monument Bay in 2013, as well as a regional surface-exploration program over 136 contiguous claims that form the 338 sq. km Monument Bay camp.
Mega shares jumped 27% — or 3¢ after news of the resource update — en route to a 14¢ close at press time. Mega has 112 million shares outstanding and a $16-million press-time market capitalization.